Budget By The Government Is Likely To Step Up The Expenditure - Feb 16, 2009

The interim budget by the UPA government is likely to step up the expenditure on its flagship programmes along with rural development and housing that doubling the fiscal deficit to 5% in 2009-10. The interim budget is to be presented by External Affairs Minister Pranab Mukherjee who is currently holding the charge of Finance Ministry. The government in the last Budget has fixed the fiscal deficit for the current fiscal at 2.5 per cent of GDP, which is likely to be raised to 5 per cent for the next fiscal, primarily on the back of higher allocations towards the government''s flagship schemes like the Bharat Nirman and the National Rural Employment Guarantee Scheme.

The government to provide focus on the urban infrastructure may expand the ambit of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to include more districts. Besides this, the other focus of the Budget is likely to be on rural development which may witness some more allocations. The interim Budget may also provide a token allocation for kick starting the Unique Identification (UID) scheme to provide a specific number to every citizen.

In line with this, the infrastructure finance company IIFCL may be authorized to raise money through tax-free bonds. With the last two-stimulus package announced by the government due to slowdown, the fiscal deficit has already crossed four per cent till December. The total gross budgetary support (GBS), which represents the expenditure towards Plan schemes and transfer of resources to states, may be increased.